US v. Van Engel
| Decision Date | 21 December 1992 |
| Docket Number | No. 91-Cr-5.,91-Cr-5. |
| Citation | 809 F. Supp. 1360 |
| Parties | UNITED STATES of America, Plaintiff, v. Kurt Henry VAN ENGEL, Lyle Van Engel, Bernard K. Van Engel, Joseph L. Palmisano, Barbara A. Schwellinger, Howard F. Schaefer, Eugene E. Knoll, Larry J. Pitzen, and James A. Walker, Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
COPYRIGHT MATERIAL OMITTED
Paul Kanter, Asst. U.S. Atty., and Eric J. Klumb, Deputy U.S. Atty., Milwaukee, WI, for plaintiff.
Stephen Kravit, Kravit, Gass & Weber, S.C., Milwaukee, WI, for defendant Kurt Van Engel.
William E. Callahan, Davis & Kuelthau, S.C., Milwaukee, WI, for defendant Lyle Van Engel.
David P. Lowe, Jacquart & Lowe, S.C., Milwaukee, WI, for defendant Bernard Van Engel.
Thomas E. Brown, Gimbel, Reilly, Guerin & Brown, Milwaukee, WI, for defendant Joseph Palmisano.
James M. Fergal, Schellinger & Doyle, Brookfield, WI, for defendant Barbara Schwellinger.
Steven M. Epstein, Levine, Epstein & Kohler, Milwaukee, WI, for defendant Howard Schaefer.
Kenneth Sullivan, Chicago, IL, for defendant Eugene Knoll.
Richard Kaiser, Waukesha, WI, for defendant Larry Pitzen.
Steven I. Cohen, Green Bay, WI, for defendant James Walker.
DECISION AND ORDER
The final pretrial issue in this case is an unappetizing one; Kurt Van Engel's motion to dismiss the indictment based on a claim that the government engaged in prosecutorial misconduct and that it abused the grand jury process. The issue has been briefed, and a hearing was conducted on the matter at the end of October. After the hearing I urged the parties to meet and try to resolve the issue. I have been advised that efforts to reach an agreement were unsuccessful. My decision on the motion follows.
Mr. Van Engel asserts seven grounds in support of his motion to dismiss:
Issues three through six fall under the general claim of grand jury abuse. Issues one and two are hybrids; part grand jury abuse and part government misconduct. I will, in no particular order, address the first six issues and then go to the most troubling issue, number seven.
I will resist the temptation to get bogged down in a lengthy recitation of the facts giving rise to the various issues raised on this final motion to dismiss. The facts have been spelled out in other decisions, both by me and by the magistrate judge. They will not be repeated here. I will only comment on the facts if I believe that comment is necessary for a full understanding of the context within which I decide the issues.
Issue two relates to what I'll call the Milwaukee Magazine interviews. The lead agents involved in the investigation of Mr. Van Engel, Richard Arkenberg of the IRS and Peter Linder of the FBI, consented to be interviewed by James Romenesko of Milwaukee Magazine in early 1989, while the grand jury investigation was under way. It was not a good idea. In May 1989, Milwaukee Magazine ran a lengthy lead article entitled "The Battle of Commission Row" by Mr. Romenesko. It contained extensive, but unattributed, quotations that I find came from Agents Arkenberg and Linder. The article recounted, among other things, the allegations in various civil suits (the Baake, Zingale, and Shultz litigation), statements in the search warrant affidavit, details of the execution of the search at the Van Engel company May 13, 1988, and gratuitous opinions and observations about the investigation of Mr. Van Engel. In his article, Mr. Romenesko ascribed much of his information and some of his quoted matter to "federal investigators" or "federal officials." Those agents were Arkenberg and Linder.
Federal government agents do not ordinarily talk to reporters about pending investigations. Agent Linder was reluctant to talk to Mr. Romenesko, but he was instructed to do so by his superior, Larry Nelson, the former agent in charge of this district's office of the FBI. Agent Arkenberg testified that in his 17 years as an IRS agent he had never given a statement other than "no comment" to the press about a pending case. The decision by the agents to talk to Mr. Romenesko was unusual.
Rule 6(e) states:
A grand juror, an interpreter, a stenographer and operator of a recording device, a typist who transcribes recorded testimony, an attorney for the government, or any person to whom disclosure is made under paragraph (3)(A)(i) of this subdivision shall not disclose matters occurring before the grand jury, except as otherwise provided for in these rules. No obligation may be imposed on any person except in accordance with this rule. A knowing violation of Rule 6 may be punished as a contempt of court.
In a hearing before Magistrate Judge Bittner, Agents Arkenberg and Linder maintained that they talked with Mr. Romenesko only about information contained in the search warrant affidavit that had recently been made public. As I read it, the overwhelming percentage of information appearing in the Milwaukee Magazine story comes directly from the search warrant affidavit. Once information or evidence involved in a grand jury investigation properly becomes part of the public record, as it does when a search warrant affidavit is unsealed, it loses its character as grand jury material. Although it was unwise, the agents did not violate rule 6 by talking with Mr. Romenesko about the contents of the warrant.
But, the agents' claim that they confined their discussion with the reporter only to matters disclosed in the search warrant affidavit is not credible. Agent Linder admitted to the possibility that he told Mr. Romenesko that "this is the first time the FBI has looked into the produce business here." Agent Linder also admitted that he could have said "we're all getting screwed on this." Agent Arkenberg, the affidavit's author, admitted saying that Mr. Van Engel "doesn't show his money at all." Both Agents Linder and Arkenberg discussed various "Oost" checks (claimed to be phony) with Mr. Romenesko, but maintained that they discussed only the Oost checks described in the affidavit and specifically did not discuss the Oost checks they had received from Mr. Van Engel's lawyers pursuant to a grand jury subpoena. Both agents said they might have made the statement that general knowledge in the banking industry is that company checks should not be cashed. These topics are beyond the contents of the search warrant. To the extent that they strayed — and they strayed a tad — from the four corners of the affidavit, they violated rule 6. But I am not convinced that the violation is the kind of knowing violation of the rule that would make sanctions appropriate.
Sanctions aside, the real problem with the highly unusual decision of the agents to speak with Mr. Romenesko about a pending investigation is that it adds fuel to Mr. Van Engel's argument that the government engaged in an orchestrated effort to try him in the press and ruin him personally, long before the return of the indictment. The agents let it be known that Mr. Van Engel was a bad guy who had done wrong. Comments like "We're all getting screwed on this" certainly convey the impression that the federal "investigators" or "officials" are convinced of Van Engel's guilt. These kinds of comments, to a reporter who is obviously going to use them in a story, should not be made. Agents should, absent a compelling need that is not present here, let indictments do their talking. They should not, as agents of the government, give interviews and express opinions like those given here while a case or an investigation is pending. Had the Milwaukee Magazine article found its way into the grand jury room — which would not have been impossible — a resulting indictment would be suspect.
I now turn to issues one, three, four, and five. On these points, Mr. Van Engel complains about prosecution "lies" submitted to the magistrate judge, an alleged abuse of the grand jury's subpoena power, a "flagrantly excessive" parade of hearsay before the jury, and a failure, by the prosecutor, to present evidence to the grand jury that cast doubt on Mr. Van Engel's alleged criminality. These issues have at least one thing in common: not much merit.
Mr. Van Engel argues that the government abused the grand jury's subpoena power by subpoenaing individuals for the purpose of interviewing them instead of presenting them personally to the grand jury as witnesses. It appears that about 20 noncustodial witnesses received grand jury subpoenas during the time this matter was pending before a succession of three grand juries. Almost all of them gave statements to the government agents in lieu of testifying. Most of these witnesses were represented by counsel. The procedure followed seems to have been done with the knowledge and consent of the attorneys for the witnesses. Four witnesses who were not represented by counsel and who did not personally testify were from Florida, North Carolina, Texas, and Arizona.
The government, I believe, did not interview witnesses for any reason other than efficiency of the grand jury and the convenience of the witnesses and their attorneys. Most importantly, I find that Mr. Van Engel was not prejudiced by the procedure, and the grand jury was not misled or denied witnesses' testimony.
This leads to the next concern: the use, or rather the alleged "flagrantly excessive" use of hearsay in the grand jury room. Five witnesses (other than...
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